MANDATORY INTERLOCUTORY INJUNCTION

An interlocutory injunction preserves the status quo until the trial of action.
Where that injunction is mandatory in nature there has been a departure from
the test established in campus oil Hcl, which is the locus classicus for
interlocutory injunctions.

The case concerned a ministerial order, which required P to purchase oil

requirements from the state, while it was being reserved to the ECJ, D sought an
interlocutory injunction to compel P to comply with the terms of the order. The
test is;
1. Is there Prima Facie a serious case to be tried? Must prove an actionable
wrong.
2. Are damages appropriate? I.e. if injunction is granted & P loses at trail,
will D be adequately compensated? Conversely if it is refused and P
wins, will they be adequately compensated for losses in the meantime?
3. On the balance of convenience, would P (applicant usually) be
disproportionately burdensome.

In Wallace Vlnsh Aviation, Hogan J applied Campus Oil principles in grantinf

an interlocutory injunction refraining an employer from suspending P, because
damages would not be adequate to compensate loss of reputation. In private
research V Brosnan, it was stated that in deciding where the balance of
convenience lies, the courts would prefer whatever maintains the status quo, and
this factor will only be considered where damages are found not to be an
adequate remedy. It appears that the considerations for both damages & the
balance of convenience will be the same for mandatory and prohibitory
injunctions.

The first factor in Campus Oil has been questioned heavily where the
interlocutory injunction is mandatory in nature. It appears that the applicant will
need to go further than proving he has a Prima Facie serious case to be tried. In
Shepard Homes v Sandham – Megarry J stated that P must have an unusually
strong case before a mandatory interlocutory injunction will be granted. In the
‘Bees Tribunal Case’ an injunction was refused on the basis that the case was
not clear and strong enough.

The test was confirmed in Lingham v Health Service Executive. Fennelly J –

the applicant must go further than proving a ‘Prima Facie Case’, he must shout
a string case that he is likely to succeed at trial. This was followed in Naujorks
(Kelly J – quotes film Rover). In Selbourne Hotel Holdings v Torriam, the court
took a slightly different route by adding that they will seek to minimize the risk
of injustice by making the wrong decision at the interlocutory stage. The
requirement for a stronger case than a Prima Facpie one is due to the nature of
the order being a requirement for someone to do something rather than simply
not to do something. (course of action). Lingham was applied recently in
Murphy v (2020) – Murphy, a mandatory interlocutory injunction was granted
to a receiver to restrain D from trespassing on property. He;
1. Proved a strong case in that he was likely to obtain an order in the trial.
2. Damages would not be adequate where D, the borrower would not be
able to pay, the
3. Balance of convenience favoured granting the decision.

There are other instances where the Campus Oil principles have been departed
from. For example where an interlocutory injunction is sought to restrain the
publication as alleged defamatory material it will be difficult to obtain as the
courts will be unwilling to intrude on freedom of expression. In Reynolds v
Malocco, the applicant had to prove that the words were in no doubt
defamatory, an even higher standard than Campus oil or Lingham.

There are specific circumstances where a mandatory interlocutory injunction

will be gransted without regard to one or more Campus Oil principles. In
Metropolitan Electric Supply V Ginder, a negative contractual covenant not to
purchase electricity from another supplier was enforced by way of a mandatory
interlocutory injunction. The courts will not grant a mandatory interlocutory
injunction where it would compel a person to work against his will for personal
services for one employer, but may grant the injunction to enforce a negative
covenant not to work for someone else. In Warner Bros v Nelson, it was held
that such an injunction would not be granted if it were to compel D to work for
P or D to lie idle.

The injunction may also be granted without regard to Campus Oil to restrain a
breach of a constitutional right. In Parson v Kavanagh (only is only available
remedy), an injunction was granted to restrain D’s unlicensed bus services as it
was a breach of P’s constitutional right to earn a livelihood.

It appears that where the granting of a mandatory interlocutory injunction would

result in any ongoing supervision by the court in ensuring adherence to the
injunction then the court will not grant the injunctive relief. This was so held in
Murclu v Ercell Ltd.

In conclusion, it appears that there are diverging opinions on the test that should
be applied when granting an interlocutory mandatory injunction. Kelly j states
that despite the SC decision in Lingham, further clarity in the area is needed.

Additional:
Evans v Carlyle – P sought mandatory interlocutory relief requiring D to
remove a defamatory billboard. He also sought a same relief restraining him
from further publications. The court acknowledged that special considerations
may be taken into account in defamatory cases. Malice and vengeance were
established in D’s conduct, which was weighed against his freedom of
expression.
QUIA TIMET INJUNCTIONS

The issue for Tom in attempting to restrain Robert from setting up a fish farm is
whether or not he can obtain a Qua Timet Injunction, a type of perpetual
injunction against him.

The essential argument that Tom must make is that the actual or anticipated
violation of his rights are not trivial, the de minimus principle being applicable.
In AC v Manchester Corp, the court held that ‘a strong case of probability of
violation’ was required in granting a quia timet injunction. This was changed by
Geogheghan J in Szabo v Esat Digiphone where P sought an injunction
restraining D from erecting a mobile telephone base near a school. Geogheghan
J found the test in Manchester to be too stringent, stating that all that needed to
be found was “a substantial risk of danger”. In Tara Mines v Cosgrave,
Hardiman J said the standard of proof was “on the balance of probabilities”.
Geogheghan preferred the approach of spy in ‘Equitable Remedies’ where he
said there was no difference between interlocutory Quia Timet injunctions and
other interlocutory injunctions but recognized that because no breach as rights
has taken place at the time of hearing in a quia timet injunction it may be more
difficult to establish that a sufficient risk of injury exists. The campus oil
principles will not apply where the injunction is not interlocutory.

Tome must prove therefore that there is a real and substantial risk of danger in
Robert setting up the fish farm. This will be related to the risk of both the
dolphins leaving the bay and his right to earn a livelihood, and the livelihood in
the town.

The level of probability of the threatened action occurring that is required for
the granting of a quia timet injunction was considered in AG (Boswell) v
Rathmines v Pembroke. Local residents sought to restrain the construction of a
quarantine hospital on the basis that there was a risk of infection. This was
refused as no risk of infection was established. The court held that P must
establish proof of actual danger to a strong probability almost amounting to
certainty.

A lesser standard was required in Independent Newspapers v Irish Press where

it was held that QT injunction would be granted where there “was a reasonabsle
probability as danger”. In Szabo the court was entitled to listen to expert
evidence which suggested that the erection of a radio frequency tower would
not cause a danger of radiation, and the injunction was refused. This was
approved in Ryancer v Aer Rianta.
Tom must argue that based on the postgraduate research of the marine biologist
there is a ‘substantial risk’ that the dolphins will move away which will have
subsequent adverse effects to the area. The evidence has said that they are only
“known to/might” move away. Whether this satisfies the courts’ test, will
depend on how seriously they take the marine biologists evidence.

There are several instances which may disentitle Tom to his prima facie
entitlement to the Quia Timet injunction. In Patterson Villerphy, a QT
injunction was granted for quarrying activities where it could be proven that
damages were not appropriate remedy for the plaintiff due to the nuisance.

Where a plaintiff comes to equity they must do so with clean hands. In Moddy v
Cox it was held that any conduct which would metaphorically “dirty” the
applicants’ hands must be directly related to the equity sued for to disentitle a
plaintiff.

The granting of an injunction must not cause undue hardship to 3 rd parties. In

Howard v Commissioner for public works an injunction to restrain development
in the Burren was rejected on the basis that it would majorly effect employment
levels in the area.

Delay defects equity (laches) and in Newport FC v FA of Wales it was held that
delay alone is not enough. The delay must also be unreasonable in all
circumstances which it was not in this case due to mitigating circumstances over
2 years.

Tom will have to prove that damages for purported loss of business will not be
an adequate remedy. There is no mention of any unconscionable conduct or
delay in the scenario to go against Toms claim.

In conclusion, in order to obtain a quia timet injunction, Tom must prove that
there is a substantial risk as danger to the dolphins should Roberts fish farm be
established. Although the Campus Oil principles will go against him at the Quia
Timet stage, the farming is set up he may be able to apply for an interlocutory
injunction.

Additional:
What was sought here was a prohibitory QT injunction. If the QT injunction
sought is mandatory in nature, the courts will be less likely to grant it as it will
be more onerous on D.

It may require a supervisory role by the courts to ensure compliance, which they
are much less likely to grant. Gravesham Borough Council v British Airways P
sought mandatory QT injunction requiring D to maintain timetables even where
they were operating at a loss. This was denied.

Step 1: Prove “substantial risk” of danger (Szabo) – mention Campus Oil

Step 2: The standard of proof to prove step 1… Independent Newspaper v

Irish Times reasonable probability of danger…

Step 3: Any factors disentitling prima facsie entitlement to QT?

MAREVA INJUNCTION

The Mareva injunction is a freezing order which is quia timet in nature. It

prevents a defendant from dealing with or dissipating assets out of jurisdiction
or disposing of them in a manner likely to frustrate the Plaintiff. It is regarded as
one of the laws nuclear weapons along with the Anton Pillar order which can
bring about an injustice if applied incorrectly due to its draconian nature.

In Eugene F Collins v Gharian Birmingham J considered the balancing of

rights of the Plaintiff and defendant. The court held that in order to succeed in
obtaining a Mareva Injunction P must establish;
1. The defendant has a clear intention to dissipate assets.
2. The intention is for the purpose of avoiding his obligation to P and
frustrating the anticipated judgement of the court.

The injunction was refused here on the transfer of cash was not inappropriate
and was done in the ordinary course of business. The decision may be seen as a
balancing in the rights of D to carry on business during the interlocutory stage
and the plaintiff rights. It seems that the requirement to show intention to
dissipate assets is onerous in order to prevent an injustice to D.

In Fleming Rank v Ireland, the court emphasized that the intention to dissipate
assets must be shown to be for the purpose of preventing P from recovering
damages. The supreme court followed this in O Mahony v Horgan, the
defendant successfully appealed a MI which prevented it from paying a sum of
money to an insurance company. Thus was not shown to be for unlawful
purposes mentioned in Fleming. The court noted that if improperly invoked the
Mareva Injunction “will bring about injustice in circumstances which it was
designed to prevent injustice”.

Delany notes that establishing intention of D in an ex parte (only 1 side board)

application is a difficult task. English court prefer a more flexible practical
approach by lading at D’s actions rather than his intention. Evidence of this
approach in this jurisdiction can be seen in Bennet Enterprises v Lipton.
O’Sullivan J qualified the usual requirement for requisite intention by adding
that he accepted it would be rare to find direct evident to evade at the
interlocutory stage. He felt that codurt should consider all circumstances as the
case, consistent with O’Mahony v Horgan. In Tracey v Bowen, Clake J too took
into account all circumstances as the case where inferences can be taken from
the alleged wrong doing. Here the asset in question were real property, therefore
not likely to be as easily dissipated as cash would be.
Hughes v Hitchi Koki, Clark J went further in stating that in most cases
requisite intention would have to be established based on other facts. Such as
where an insd vent company law which would affect the Plaintiff requisite
intention will have been established.

In Bambrick v Cooley, it was held that while an inference may be made where a
defendant intends to remove assets to another jurisdiction, the inference is less
strong where the country was a party to the Brussels Convention. The Irish
court would be as enforceable in that jurisdiction as in Ireland, under Art 31 of
the Convention.

While they are a very rare occurrence, a worldwide injunction may be granted
extending to assets outside the jurisdiction. The court will however as a basic
principle of international law be more reluctant to exercise extra-territorial
jurisdiction. In Daelaurian Group International v Simms, the court detailed
several guidelines for the granting of a worldwide Mareva Injunction which
include a much higher standard of proof of intention almost amounting to
certainty.

In conclusion, it seems reasonable to suggest that the decision in Eugene f

Collins v Gharain represented a judicial change to prior tendencies, towards the
adoption of a less restrictive approach to the requirement that a Plaintiff seeking
a Mareva injunction must show that there is a real risk that the defendant will
dispose of their assets for the purpose of preventing the Plaintiff from
recovering damages, this approach appears to follow closely with the concerns
of the court raised in the judgment of O’Mahony v Horgan.

In O’Mahony v Horgan, Hamilton J set out the practical guidelines the applicant
must comply with in order to establish an entitlement to a Mareva Injunction;
1. He must make full and frank disclosure of all matters in his knowledge
which are material for the judge to know. Given that the application is on
an ex parte basis, this was called the “Golden rule” in Tate v Boswell.
2. Give particulars of his claim against the defendant and fairly stating the
points made against him by the defendant.
3. He must give some ground for believing the defendant has some assets
here.
4. He should give grounds for believing there is a risk for the assets being
removed. The mere fact the defendant is abroad is not enough.
5. Must give an undertaking in damages in case he fails in his claim or the
injunction turns out to be unjustified.
RESULTING TRUSTS – JOINT DEPOSIT A/C

The issue for Derek will be proving that the presumption of resulting trust has
been rebutted in this scenario.

Where A voluntarily transfers property to B for no consideration it is presumed

that A did not intend to make a gig to B. It is presumed that B holds the
property on a resulting trust for A or A’s estate. This is usually the case where
A purchases property or opens a joint account in B’s name or in both their
names. Delaney notes that the presumption can be rebutted (1) by evidence that
the contrary was intended (2) or by the presumption of advancement, in Stanley
v Kieran, the plaintiff provided money for the purchase of a property and the
defendant only help it in his name as a matter of convenience. It was held that
the contrary to the presumption of a resulting trust could not be proven and the
defendant held it on resulting trust for the plaintiff.

Derek may prove that a gig was intended if he can prove that the transferor
intended to benefit the transferee. With respect to joint accounts as in this case –
A opens a bank account in his and B’s name, A retains control over the account
being the only person to lodge money in it – A intends that B will be entitled to
the money upon his death but in his will leaves it to C. A has transferred
property to B for no consideration therefore a presumption of resulting trust
arises.

This exact scenario has happened in Dereks case, he must rebut the presumption
by William’s original testamentary intention that the deposit back be payable to
“William Byrne only or survivor”.

In Owens v Greene it was held that B must prove A’s intention at the time of
creating the account was for B to be the beneficiary and that his testamentary
intention won’t suffice. This was overruled in Lynch v Burke, where it was
stated that testamentary intention rebuts the resulting trust presumption. A lady
opened a joint bank account with her niece who travelled a long distance from
Scotland to sign the documentation. The lady left all her other property to her
niece in the will so even though the will stated otherwise regarding the joint
bank account, her testamentary intention rebutted the presumption of resulting
trust and the lady’s estate could not claim to be the beneficiaries of the bank
account. In Gilvary v Maher it was also held that where both parties attend the
bank in opening the account, the bank will become contractually bound to both
parties which may rebut the presumption of a resulting trust.

The fact that Derek opened the accodunt with William may rebut the
presumption of resulting trust in this scenario. Williams testamentary intention
will be relevant in rebutting the presumption. The fact that all of the property
was left to Fred may however make it difficult to rebut the presumption for
Derek.

In conclusion, Derek will have to show that a gift of the money in the joint bank
account was intended from William in rebutting the presumption of resulting
trust. He will have to emphasize the fact that they both signed the account
together. Ultimately, it will be for court to decide.

Additional
Where A transfer property to B for no consideration for an illegal purpose, A
may try to reclaim the property by relying on the presumption of resulting trsut.

In Tinsley v Milligan, even though the transfer of property was made for the
purposes of making fraudulent social welfare claims – the transferor could still
rely of the presumption and the purpose was irrelevant. In Patel v Mirza, the
reliance test in Milligan was overruled and replaced by a ‘Public policy test’.
The illegality would be weighed proportionately with matter of public policy.
RESULTING TRUSTS – PRESUMPTION OF ADVANCEMENT
March 2017 Q1

The issue for David here is whether he can rebut the presumption of
advancement which Clare will attempt to rely on.

Delaney states that the presumption of advancement involves the inference

being drawn that a gift of property was intended, rather than a presumption of
resulting trust. The presumption will arise on foot of the relationship between
the parties.

In Pettit v Pettit it was recognized that presumption that where a man transfers
property to his wife a gift is presumed. Lord Diplock noted that this does not
work vice versa and criticized the rule as old fashioned.

The presumption is much stronger where the relationship is between a man and
his child. In Shepard v Cartwright the presumption arose where a father
transferred shares in a company to his child’s name. in Bennett v Bennett it was
held that the same presumption does not arise where a woman transfers property
into her child’s name. In McCabe Wister Bank, it was held that this only arises
where a father is in fact in a position/obligation to provide for his child i.e.
when he is in loco parentis. In Fitzpatrick v CAB, it was held that the
presumption does not arise in commercial relationships such as between
shareholders.

David is not Clare’s father, but her uncle. It will be for the courts to decide
whether he is in loco parentis to Clare, assuming the obligation to provide for
her. If this is not found to be so then Clare won’t be able to rely on the
presumption of advancement in claiming title over the property.

In McGrath v Wallace, the court held that “comparatively slight evidence” of

the contrary to the presumption would be needed to rebut the presumption of
advancement. In RF V MF, a man had purchased a house in his and his wife’s
name. By the time the purchase was completed the marriage had already ended.
The presumption of advancement and could not be established and the court
will look to the fact in rebutting or sustaining the presumption.

Prior or contemporaneous acts or statements will be evidence in rebutting the

presumption. In Shepard v Cartwright the deceased had transferred shares to his
children, he later dealt with them himself and his estate argued that these
subsequent actions rebutted the presumption of advancement to his children. It
was held that subsequent actions of the transferor can only be used against him
by the transferee – not his own estate. In RF v MF, it was held that prior or
contemporaneous statement can only be used by the transferor to rebut the
presumption of advancement but not in his favour. However subsequent acts or
statements can only be used as against the transferee – you cannot rely on your
own subsequent acts for your own benefits. For example, the presumption arises
where a father transfers property to his son and he then subsequently states it is
not a gift. He cannot rely on this statement to rebut the presumption, but he can
rely on a subsequent statement made by his son that it is not a gift.

Evidence of an illegal purpose underlying the transfer may rebut the

presumption of advancement. In Parkes v Parkes the applicant was not a citizen
so to circumvent registration he transferred the property to his wife. He could
not rely on the evidence of the illegal purpose to rebut the presumption.
Importantly, the act had already been wholly carried out. In Gascoigne v
Gascoigne, a husband transferred a house into his wife’s name in order to
frustrate creditors. He could not take advantage of his own dishonesty by using
the illegality to rebut the presumption. In Tribe v Tribe, the plaintiff had
transferred shares into his sons name to defraud creditors – however these
difficulties were resolved. He could rely on the evidence to rebut the
presumption of advancement here because the illegal act had not been wholly
performed.

Prior, contemporaneous or subsequent acts are not mentioned here. David

should be able to rely on the illegal, intent behind the transfer as the act has not
been wholly carried act, in rebutting the presumption of advancement.

In conclusion, Derek may be able to rebut the presumption of advancement by

relying on the illegality of the original transfer. He may also be able to rebut the
presumption if he is not sound to be on loco parentis to Clare, however this will
be a weaker argument.

Keane – Law in Ireland mother & child is not settled – difficult to reconcile the
reluctance to extend the presumption to wives in cases such Re Tilson is likely
to be extended in future cases.
UNDUE INFLUENCE – BANK OBLIGATIONS

A contract may be rescinded where a spouse has guaranteed the loans/debts of

the other spouse where undue influence has been established. Bank must
therefore have correct polices in place to ensure that they will be entitled to
enforce any guarantee by one spouse.

Undue influence fall into two categories, actual and presumed undue influence.
In order to show presumed undue influence a party will need to establish a
relationship of trust and confidence between the parties. Actual undue influence
is rare and relies on actual actions taken by one of the parties. In Bank of
Scotland v Bennett, the husband made serious threats to his wife if she did not
sign the necessary documentation.

Under the category of presumed undue influence, there are two sub-divisions.
These were described in Barclays Bank v O’Brien by Lord Browne – Wilkinson
– as relationships which automatically give rise to a presumption of undue
influence, they require proof that a relationship of trust v confidence exist. The
husband & wide relationship falls into the second category.

In the UK, as is clear from Royal Bank as Scotland v Etridge that the bank are
on constructive notice/on inquiry of presumed undue influence whenever the
relationship between the (borrower) and (guarantor) was not a commercial one,
such as that of a husband and wife where the opportunity of abuse is possible.

The Irish position as to when the bank is on inquiry or on constructive notice of

presumed undue influence is much less onerous than in the UK, as seen in
Ulster Bank v Fitzgerald. A wife had signed guarantees over the income of the
family income on the spot, and the bank manager had explained their meaning
along with advising her to obtain legal advice. Upon her husband defaulting on
loans she attempted to rescind the transaction on grounds of undue influence.
The court held that the bank was not on constructive notice of presumed undue
influence as the too had a state in the business. In Ireland the (banks will only
be put on inquiry where they are aware of additional information about the
parties to imply undue influence).

In Barclays Bank v O’Brien, Brown – Wilkinson laid out the obligation on the
bank where they are held to be on constructive notice of undue influence;
1. Insist on a private meeting with wife
2. Ensure she is aware of the risks
3. Explain the extent of her liability
4. Urge her to seek independent legal advice.
In Ulster Bank v Roche & Buttimer (2012) the court appeared to enclose
Etridge over Fitzgerald, however insisted that they did not intend to make
Etridge the law in Ireland. A romantic partner was found to be in an abusive
relationship when she signed a guarantee of her partner’s company’s debts. Due
to the non-commercial element to the transaction, Clark J held the bank ought to
have been on inquiry as it ought to have been aware of facts which suggest a
non-commercial element to the guarantee. Although she was a director of the
company she was not a shareholder (technically no stake).

In ACC Bank v Connolly (2015), the court differentiated when the bank ought
to be on inquiry from the decisions in Etridge & Roche Buttimer. An elderly
man guaranteed two of his sons loans for which he obtained independent legal
advise for the first but not the second. The bank had evidence that advise had
been obtained for one but not the other. The court felt that they had not been put
on notice despite the non-commercial aspect of the guarantee in Etridge & in
Roche & Buttimer there had been a claim of undue influence made, none were
made here. Therefore the bank was under no obligation to ensure that the man
had obtained independent legal advice as they had not been put on inquiry. This
was the ‘settle view’ of the Irish court. (Absent a claim – bank is under no
obligation to ensure a guarantor obtained legal advise).

In De Krester (2016), a wife was an experienced business woman and although

she was not standing to gain from guaranteeing the loans of her husbands
business (non-commercial aspect) the banks was not put on inquiry.

In Bank of Ireland v Curran (2016), no evidence of undue influence was found

where a mother guaranteed the debts of her son. The court asked;
1. BUT FOR any undue influence of her son would she have signed the
guarantee?
2. Did Creditor have actual or constructive notice of undue influence?

In ACC Loan Management v Gerard Sheehan (2016) showed that whether or

not the bank will be on inquiry will be down to the particular facts of the case.
A brother personally guaranteed the loans of his brother’s company. The bank
would not have been put on constructive notice but it was a pre-condition that
they receive a letter confirming he had obtained independent legal advice. The
bank waived this pre-condition therefore the court said that they were put on
constructive notice, for waiving their own requirement and as it turned out the
legal advice had been wholly deficient. Therefore the guarantee was void.

In conclusion, it would seem that the Irish bank’s obligations to ensure the
guarantor has received independent legal advice is less stringent than in the UK,
as in Etridge. Although Etridge seemed to be somewhat endorsed in Roche &
Buttimer, it appears that the settled view in Ireland is that absent any claim or
implication of undue influence between spouses, the bank will not be put on
constructive notice of presumed undue influence.
UNDUE INFLUENCE – RESCISSION
2018 Q6

The issue for Dermot in order to have this bequest is to prove that it was made
under undue influence. Alternatively he may argue it should be rescinded due to
improvidence.

In Allcard v Skinner, Cotton J said that a contract will not be rescinded to save a
party from the consequences of their own folly, but because it is right to sauce
them from being victimized by others. He recognized actual undue influence
where the contract would be rescinded. These cases are rare, and as in Bank of
Scotland v Bennett where a husband threatened to tear a family apart to have his
wife sign a guarantee. He also recognized cases of presumed undue influence
where relations between done and donor would give rise to such presumption.

There are two classes of undue influence. Class 2A presumed undue influence
arises in certain scenarios depending on the relationship of the done and donor.
For example in McMackin v Hibernian Bank where a child transfer property to
a parent or where a client transfer property to his solicitor. It is due to the
defendants social or professional status. In Allcard v Skinner it was held that the
relationship must also be accompanied by a manifest disadvantage for a
presumption to be made which is not readily explicable. This was followed in
Royal Bank of Scotland v Etridge.

A class 2B situation of presumed undue influence arises where a party is not

recognized on the list of Class 2A relationships, but the same characteristics
exist. The principles are;
1. Transferor place trust & confidence in transferee
2. Transaction manifestly to transferors disadvantage.

This will normally arise in familial situations. In Gregg v Kidd, a man was
entirely dependent on her sister after a stroke and feared losing her case so he
transferred property to her. Evidence was given that she was forceful and
determined. The presumption arose and the court stated that even though
influence arises in family anyway, they will look at the actual relationship of the
parties. In Prendergast, an incapacitated mother with Alzheimer transferred
property to her son with no independent legal advice and the 2B presumption
arose. A class 2B presumption may arise in spousal relationship as seen in
Barclays Bank O’Brien where a wife guaranteed a second mortgage over the
family home for husbands company which she had no interest in.

It appears that Dermot has a good case of proving a class 2A case of presumed
undue influence here due to the patient/carer relationship in place at the home.
If this does not arise then he also has a case to prove a class 2B relationship due
to the trust & confidence that existed between Barry & Derek.

In Carroll v Carroll the court stated that the ones is on the defendant to rebut the
presumption of undue influence. A father had transferred his pub to his son on
account of solicitors advice where they were also found to be acting for the son.
The defendant had to show;
1. P received independent legal advice.
2. Transferor was acting of his own free will.

This could not be proven here.

Derek will have trouble rebutting any presumption of undue influence as it can
be shown that Barry did not receive any independent legal advice.

Where undue influence cannot be proved Dermot may be able to prove an

improvident or unconscionable transaction. This usually arises due to one party
being at a serious disadvantage by way of poverty or old age. That party will
depend on somebody who may take advantage of this. In Grealish v Murphy a
mentally deficient, elderly former signed over an interest of absolute title in his
land to a man in return for a promise to remain on the farm. This was rescinded
as the bargain was largely disproportionate.

Dermot may argue that due to Barry’s dependence on Derek, and his mental
disabilities, Derek took advantage of this unconscionably.

In conclusion, Dermot will have a strong case of presumed undue influence,

which Derek will find difficult to rebut. Alternatively there is also an argument
for the contract to re rescinded for improvidence or unconscionability.
RESULTING TRUSTS – QUITCLOSE TRUSTS.
March 2018 Q7.

The issue of Get Rich Quick Ltd (GRQ) here is whether an automatic resulting
trust – known as the Quitclose trust arises.

A quitclose trust will typically arise where a lending institution loans money for
the purpose of completing some very specific business transaction, project etc.
Where the company then enters difficulty the moneys automatically will result
in the lender.

In Barclays Bank Ltd v Quitclose Investments Ltd., the company was loaned
money for the specific purpose of paying dividends, and the money was put into
a specific bank account for this purpose. When the company entered insolvency
the dividends couldn’t be paid and the plaintiff company wanted to use the
dividends to discharge debts. It was held that the lender had an equitable right to
see that the money was applied for the particular purpose and that it was
expressly or impliedly agreed that the money would be held in resulting trust for
the lender in this case.

In Re McKeon, under similar facts, the same result was held but the court noted
that the word “trust” did not technically need to be mentioned in the loan
agreement. In Twinsectra v Yardley, Lord Millett stated that money advanced to
a borrower will normally be “owned in title by the borrower” – however if
loaned for a specific purpose then a quitclose trust will arise and it is an
orthodox example of the kind of default trust known as a resulting trust.

In Harlequin Property v O’Halloran, the lender had paid funds for “the
completion of a project” – it could not be said that the funds were for a specific
purpose and a quitclose trust was not established. The specific purpose of the
loan must be very clear.

For Get Rich Quick Ltd, it seems like the requirement for the loan monies to be
in specific bank account has been satisfied. The case will hinge on whether the
specific purpose of the loan is clear enough. A building block of apartments in
the midlands may not be specific enough and therefore they may not have
equitable title in the loan monies over company creditors. It does not matter
specific wording to the word “trust” is missing.